Mid-Week Technical Outlook: FX Trends To Watch Out For In July

Some semblance of calm returned to markets on Wednesday following the painful selloff in the previous session.

European stocks rebounded despite the cautious mood while US futures wobbled amid fears of a global recession. In the currency markets, the mighty dollar flexed its safe-haven muscles ahead of the Federal Reserve minutes while the euro extended losses against G10 currencies. Looking at commodities, gold remained depressed and unloved below $1765 thanks to an appreciating dollar. Brent found itself under renewed pressure, approaching the $100 psychological level.

As the new trading month of July gets underway, this could present fresh opportunities across FX markets. Today, we will be using multiple timeframe analysis (MFTA). This is a method of analysing long-term, medium-term, and short-term timeframes to achieve an accurate entry or exit when trading the markets.

GBPUSD bears switch into higher gear…

After bouncing within a very wide range since mid-2016, the GBPUSD could be gearing up for a steep selloff below the 1.2040 support level.

Prices remain heavily bearish on the monthly timeframe as there have been consistently lower lows and lower highs. The candlesticks are trading below the 50, 100, and 200-month Simple Moving Averages. A strong monthly close below 1.2040 may pave the way towards 1.1500.

On the weekly charts, we see a similar picture with bears firmly in the driving seat. Should the GBPUSD conclude the week under 1.2100, this may trigger a steeper selloff towards 1.1800 and 1.1500, respectively.

Zooming into the daily, we see consistently lower lows and lower highs. The recent breakdown below 1.1950 is an encouraging signal for bears and opens the doors to further downside with 1.1650 acting as the first point of interest.

Should 1.1950 prove to be reliable support, the currency pair may experience a rebound towards 1.2200 and 1.2350, respectively.

EURUSD parity around the corner…?

We will keep this one quick since we have already covered the EURUSD this week.

The currency pair is roughly 200 pips away from parity as of writing. With bears in full steam and the trend heavily bearish, parity could be around the corner in a matter of days to weeks. Talking technicals, a strong weekly close below 1.0200 could encourage a selloff towards 1.0000. Should 1.0200 prove to be reliable support, a move back towards 1.0400 could be on the cards.

AUDUSD remains in a downtrend

A picture can say 1000 words. Much is being said on the AUDUSD weekly timeframe as prices find resistance around 0.6850. Sustained weakness below this level could encourage a decline towards 0.6650.

NZDUSD textbook breakdown opportunity

If you are looking for a clean bearish trend, then check out the NZDUSD on the weekly timeframe. There have been consistently lower lows and lower highs while the MACD trades below zero. A strong weekly close below 0.6200 could result in a selloff towards 0.6000. If 0.6200 proves to be a tough nut to crack, a rebound back towards 0.6400 could occur.

GBPJPY bull run over?

Things are heating up for the GBPJPY on the weekly charts. After failing to break above 167.50, bears seem to be back in town and ready to switch up the pressure. This is looking like a bearish week for the currency pair with 158.00 acting as the first key level of interest. A strong breakdown and daily close under the 158.00 higher low may inspire a selloff towards 151.00.

BONUS: GOLD

It’s been a painful week for gold thus far with the precious metal trading at levels not seen since December 2021. The balance of power seems to be shifting in favour of bears and this continues to be reflected in price action. $1745 remains the first level of interest, followed by $1700. For bulls to jump back into the game, a rebound back towards $1800 needs to happen – which could be a steep hill to climb.

EURUSD GBPUSD AUDUSD NZDUSD Gold